What We Must Monitor
In An Era of Unprecedented Uncertainty

That we are living in an “era of uncertainty” may always be an apt description. In the aftermath of the 2008–2009 global financial crisis, uncertainty stemmed from the shock of the crisis itself, while in the wake of the COVID-19 pandemic in 2020, it reflected the unprecedented disruption caused by a global health emergency.
How, then, does the level of uncertainty we face in 2026 compare with previous periods, and what are its sources? To address this question, the World Uncertainty Index compiled by the International Monetary Fund from 2008 onward is shown in [Figure 1]. The index rose sharply after 2025 and, although it has declined from its peak in April 2025, the index remains significantly higher than levels observed following the global financial crisis or the pandemic.

[Figure 2] provides further insight into the sources of this uncertainty. The US Trade Policy Uncertainty Index, developed by renowned economists Baker, Bloom and Davis, increased sharply from just before the inauguration of the second Trump administration in January 2025 and reached its peak in April 2025, when reciprocal tariffs were announced on a global scale. The index began to decline as countries subsequently engaged in renegotiations with the United States to reduce these tariff rates. The recent trajectory of US trade policy uncertainty closely mirrors the movement of the World Uncertainty Index shown in [Figure 1].
In effect, the current elevated level of global uncertainty can be attributed in large part to the trade policies of the second Trump administration. This has been compounded by the US Supreme Court ruling in early 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA), including reciprocal tariffs and fentanyl-related tariffs, exceeded presidential authority, which added a new layer of uncertainty. Nevertheless, the administration’s commitment to maintaining tariff measures appears firm. In the near term, a global tariff of 10–15% on imports under Section 122 of the Trade Act is likely to be imposed as a substitute for reciprocal tariffs. Before the expiration of this provision within 150 days, there may be investigations into unfair trade practices by partner countries to introduce additional tariffs under Section 301 of the Trade Act or Section 232 of the Trade Expansion Act. As uncertainty over the scope and structure of these measures increases, the US Trade Policy Uncertainty Index rose from around 2,250 in January 2026 to nearly 3,150 in February.
Alongside trade policy uncertainty, the outbreak of war between the United States and Iran in early March 2026 has further deepened global uncertainty. Reportedly, the strategic outline of the conflict from the US and Israel's point of view involved three phases: first, the removing Iran’s core leadership; second, large-scale airstrikes aimed at neutralizing ballistic missiles, drones and air defense systems; and third, the removal of regime-supporting forces, including the Revolutionary Guard, with the objective of establishing a new government. One week into the conflict, operations appear to be in the second phase, and the duration and intensity of the war will likely depend on whether or not the third phase is entered, as well as whether ground operations will be initiated. Financial markets are increasingly reflecting the possibility of a prolonged conflict. International oil prices, in Brent crude terms, rose from the low USD 70s range per barrel prior to the outbreak of hostilities to above USD 90 within a week. While the three major US stock indices declined, the demand for safe-haven assets increased, which drove up US dollar and gold prices. The economy detests uncertainty and as uncertainty rises, firms tend to scale back capital investment and households reduce consumption. Financial market volatility increases, particularly in equity markets, and exchange rates become unstable. These factors are expected to exert downward pressure on both the global economy and the Korean economy, but the magnitude of their impact will depend on the direction of US trade policy and the evolution of the US–Iran conflict. Thus it is difficult to make definitive projections at this stage.
Nonetheless, the most appropriate approach to assessing future prospects for the global and Korean economies is to return to baseline forecasts established prior to these developments and adjust them to reflect recent changes.
At the beginning of this year, global economic projections for 2026 presented by international organizations such as the IMF and the OECD can be summarized as follows. Global growth was expected to remain in the low-3% range, broadly in line with the pre-pandemic 10-year average of 3.1%, despite US trade policy developments. Among advanced economies, the US was projected to maintain relatively strong growth, while Europe was seen as gradually recovering from a period of weakness, and China’s growth was expected to moderate amid continued challenges in the real estate sector. In terms of US trade policy, it was anticipated that the Trump administration, facing midterm elections in November, would refrain from implementing aggressive tariff measures that could place additional pressure on the domestic economy, particularly through inflation. These projections, however, did not incorporate the possibility of a US–Iran conflict.